JetBlue Airways (NASDAQ: JBLU) Q1 2020 Earnings Call Transcript

JetBlue Airways Corp. (JBLU) Q1 2020 earnings call dated May 07, 2020

Corporate Participants:

David Fintzen — Vice President, Investor Relation

Robin Hayes — Chief Executive Officer

Joanna Geraghty — President and Chief Operating Officer

Steve Priest — Chief Financial Officer

Analysts:

Duane Pfennigwerth — Evercore ISI — Analyst

Catherine O’Brien — Goldman Sachs — Analyst

Hunter Keay — Wolfe Research — Analyst

Brandon Oglenski — Barclays — Analyst

Jamie Baker — JPMorgan — Analyst

Joseph DeNardi — Stifel Nicolaus — Analyst

Savanthi Syth — Raymond James & Associates — Analyst

Helane Becker — Cowen and Company — Analyst

Michael Linenberg — Deutsche Bank — Analyst

Andrew Didora — Bank of America – Merrill Lynch — Analyst

Christopher Stathoulopoulos — Susquehanna International Group LLP — Analyst

Presentation:

Operator

Good morning, my name is Erica, I would like to welcome everyone to the JetBlue Airways, First Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to JetBlue’s VP of Investor Relations, David Fintzen. Please go ahead.

David Fintzen — Vice President, Investor Relation

Thanks, Erica. Good morning everyone and thanks for joining us for our first quarter 2020 earnings call. This morning we issued our earnings release, our investor update, and a presentation that we will reference during this call. All of those documents are available on our website at investor.jetblue.com and have been filed with the SEC.

Joining me here in New York to discuss our results are Robin Hayes, our Chief Executive Officer; Joanna Geraghty, our President, and Chief Operating Officer and; Steve Priest, our Chief Financial Officer. Also joining us for Q&A are Scott Laurence, Head of Revenue and Planning; and Dave Clark, VP of Sales and Revenue Management.

This morning’s call includes forward-looking statements about future events. Actual results may differ materially from those expressed in the forward-looking statements due to many factors and therefore, investors should not place undue reliance on these statements. For additional information concerning factors that could cause results to differ from the forward-looking statements, please refer to our press release, 10-Q and other reports filed with the SEC.

Also during the course of our call, we may discuss several non-GAAP financial measures. For reconciliation of these non-GAAP measures to GAAP measures, please refer to the tables at the end of our earnings release, a copy of which is available on our website.

And now, I’d like to turn the call over to Robin Hayes, JetBlue’s CEO.

Robin Hayes — Chief Executive Officer

Thanks, Dave and good morning everyone and thanks for joining us, and Dave before I start, congratulations on your promotion, which occurred since the last earnings call and of course with everything that has happened we haven’t really had the chance to celebrate that. But you do a terrific job, and thanks for what you do for the JetBlue team.

David Fintzen — Vice President, Investor Relation

Thank you, Rob.

Robin Hayes — Chief Executive Officer

I could not be prouder of our JetBlue family, not just over the past two decades, but for their service to each other, our customers, and our communities as they provide an essential service during this coronavirus pandemic. In our 20th anniversary year, we are facing the biggest threat we’ve seen to our Company and our industry. Our crew members though, yet again have risen to the challenge to inspire humanity at a difficult time all while living our founding values of safety, caring, integrity, passion, and fun.

We are deeply saddened to have lost six crew members to the coronavirus, including a pilot, two members of our in-flight community, one support center colleague, and two airport crew members. Ralph Gismondi, Charles Chuck Lewis, Jared Lovos, Kevin McAdoo, Ray Pabon, and Nikki [Indecipherable], were valued and amazing members of our JetBlue team, each with a special and unique story.

You know, Ralph joined us from — after retiring from the New York City Fire Department, including two tolls of duty at ground zero and we honor him with the cover of our earnings deck today. Chuck was known to his fellow ground ops crew members as a natural and confident leader. Jared bought the same warmth and compassion to our people team here in our LISC [Phonetic], Long Island Support Center that he demonstrated in his previous role as an in-flight crew member.

Kevin, retired after distinguished service with the US Air Force where he served for 20 years and had multiple tolls. Ray was known for his carrying nature. And Nikki, was known amongst her airport ops colleagues for being extremely kind-hearted and having an excellent sense of humor.

Our hearts goes out to their families and loved ones as we are supporting them, and also to all of our crew members who have been impacted by this virus. For those that we have lost, we remember them every day, and we pause briefly now as we remember them as our beloved members of the JetBlue family.

Turning to Slide 4 of our presentation. For the first quarter, we reported an adjusted loss of $0.42 per share, driven by an unprecedented fall in demand that started late in February. It has been a couple of very challenging months, and our team have responded with extreme urgency and taking actions at every level to protect JetBlue. We were fortunate to have entered this crisis with the second strongest balance sheet among US airlines. In the last two months, we have moved quickly to both protect and strengthen our liquidity position.

Since the beginning of March, we have made decisive changes to our growth plan to minimize cash burn, including deep capacity cut to our schedule. We have reduced our capex plan by $1.3 billion between now and the end of 2022 and by the end of May we anticipate, we would have lowered our operating expenses by around 50% year-over-year. We are so incredibly grateful for the support received from our business partners and crew members who have helped us minimize cash burn during these challenging times.

In March, Congress passed and the President signed into law the CARES Act. JetBlue is very grateful to President Trump and his administration, particularly secretaries Mnuchin and Chao as well, as Congress especially Senate Minority Leader, Chuck Schumer for strongly recognizing the value of our industry and for supporting our crew members. I also want to thank Nick Calio and the team at Airlines for America for their amazing teamwork as we came together to protect jobs.

This move alone will not solve the longer-term problems that the coronavirus pandemic is creating. But it does provide much needed temporary support for our crew members and buys us vital time to plan for both a changed demand environment and of course an eventual recovery.

We reached an agreement with the Department of Treasury and received $936 million in payroll support. In exchange for these funds, the US government received approximately 2.6 million warrants as consideration for the amount granted to JetBlue. And of that $936 million, $251 million must be repaid to the US government.

In late April, we also applied for the federal loan program, which would provide up to $1.14 billion in further liquidity. We will continue to evaluate all alternatives to raise cash and plan to access the facility if needed. Given our actions and government support, we believe our balance sheet remains one of the strongest amongst US airlines, and our cash and short-term investments currently equates to over $3 billion.

The demand environment continues to be exceptionally challenged due to the coronavirus. As we move towards recovery, we have three priorities. The first one is the immediate need to protect the safety of our crew members and customers. The second is to minimize cash burn. The third priority is to set JetBlue up for future success by restoring customer confidence, by returning to cash generation, and by rebuilding our margins and balance sheet.

We are preparing for a number of recovery scenarios and working with different leading indicators. For JetBlue, we expect our path will look a little different from many of our peers given our network footprint, customer demographics, low-cost model, and our customers’ trust in our brand.

As you’d expect, we are being conservative in our planning and as states reopen and the economy comes back online, we are planning on being flexible and quick to adapt. We believe that building customer confidence will be a critical part of recovery, not just for JetBlue or the airline industry, but the travel industry overall.

We believe confidence will come from a cross-functional effort that includes working together with industry partners, local governments, regulators, and other entities. We also believe that the Board of travel industry will need to make a collective effort to stimulate and promote a return to travel. Only by getting things moving again will we get back to generating cash. We look forward to working with our travel partners throughout the recovery.

We have taken the leadership position in our industry and started by giving confidence and flexibility to customers with travel waivers. We were also the first carrier to provide free flights to healthcare professionals for relief efforts and transport essential medical equipment. It remains critical that we collaborate and support each other in these challenging times.

We believe that not only will we get through this crisis, but we will emerge as a stronger JetBlue. Over the past few years, we focused on strengthening our balance sheet and preparing for an eventual downturn. After the start of this pandemic, we were well on course to deliver on our financial commitments in 2020.

As we move into recovery, we look forward to getting back to executing our building blocks, improving our network, our product offering, investing in our fleet, all while remaining true to our low-cost routes. Just as in past downturns, along the way we anticipate looking for opportunities that may not have been possible for JetBlue, just a few months ago.

JetBlue has been a true force for good in our industry, and we have been resilient through the crisis for over 20 years.

Most importantly of all, I want to once again thank our 23,000 amazing inspiring crew members for their vital role in this tremendously challenging time. And with that, I’d like to pass over to Joanna.

Joanna Geraghty — President and Chief Operating Officer

Thank you, Robin. I’d like to start by thanking most profusely our crew members for their outstanding service and loyalty, not only to our customers, but to each other. From the very beginning of this pandemic, a few short months ago, predictions and forecasts of every type each day only proved how uncertain the future could be. At JetBlue, however each new day brought one absolute certainty. And that was the professionalism, humanity and commitment of our crew members to delivering a safe and secure JetBlue experience while living our values.

This constant has been and continues to be an inspiration to us all. Our first priority since the onset of the pandemic has been equally constant, in short, the safety of our customers and crew members. We’ve responded quickly to changing conditions and overseeing the rapid evolution of policies and programs designed to address the threats to crew members and customer safety posed by this virus. We were early to announce the COVID-19 sick pay and quarantine framework and to implement an internal contact tracing and notification process.

And as the press recently reported, we were the first to require customers to wear face coverings. We have aggressively managed capacity from the very outset, doing our best to eliminate any non-essential flying, while also ensuring CARES Act compliance. We have focused on crew protection, by increasing cleaning and disinfection across our operation in all facilities, eliminating New York City overnight crew lay overs, working with crew transportation companies to ensure social distancing, implementing jumpseat buffers, mandating the uses of facial coverings, and the use of other PPE, reducing service touch points on board the aircraft, modifying in flight briefings, and deferring training events.

I would now like to turn to Slide 6, and our revenue and demand trends. Beginning in the last week of February, we saw a sharp fall in forward bookings across our network, and revenues in March were down 52% year-over-year. Following a very solid start to the year, our first quarter revenues declined 15% year-over-year resulting from both lower demand volumes and a very challenging fare environment. During April, our revenues were down approximately 95% year-over-year.

While the overall number of bookings remained extremely limited during the second quarter, we expect to see small increases in demand as various geographies in our network began a phased reopening. To provide some additional detail regarding the level of our capacity changes, we are currently operating around 100 flights per day.

This compares to our previous average of approximately 1,000 flights per day. The customers we fly today are largely people who are traveling for critical reasons or due to essential needs. And our load factors averaged between 10% and 15% for much of April. We believe that we have reached the bottom in terms of demand around mid-April.

That said, we expect to have a better sense of the third and fourth quarter of 2020 by early summer. We envision this environment, a very limited demand will continue into at least the short if not medium term, and believe our inherent strength as a trusted brand with an unparallel culture and superior product should serve us well as customers evaluate their travel options.

We plan to continue to be thoughtful as we adapt to changing customer needs. As Robert mentioned, we are working on a number of scenarios for recovery, and although we are conservative in our planning assumptions, we will respond quickly to changes in demand with capacity, pricing and customer policies.

Moving to capacity on Slide 7. Our March capacity declined 19% year-over-year as a result of scheduled reductions and close in cancellations. As the pandemic began to manifest during the month, we adjusted our March flying levels to mitigate cash losses and rapidly declining load factors. We typically would have managed reductions at this level through a schedule change, but due to the speed and impact of the pandemic, we were put in a position of having to make these changes much closer into the travel date.

I’m very proud of our crew members for reshaping our operation in such a short period of time, and re-accommodating our customers under enormous pressure. For April and May, we have had more time to adjust our schedules and our working assumption for the second quarter is for capacity to be down about 80% compared to our original plan.

We’ve been aggressively managing all past capacity decisions with the goal of maintaining only an essential level of flying in our markets and complying with the CARES Act. In mid-April, we consolidated operations across five metro areas through June 30th, and now operate at only one or two airports in each, including Boston, Los Angeles, San Francisco, New York and Washington DC.

Based on our projections for continuing low demand in the near-term, we expect to reduce many markets to less than one flight per day. Due to ongoing border closures, we have already suspended service to more than 20 of our international cities. We anticipate the situation will remain fluid as we head into the summer as states and foreign governments reopen their geographies.

Giving the meaningful capacity reductions, we’ve grounded approximately 170 aircraft. This has been a significant source of cash savings. As we look to future quarters, we expect to remain flexible, managing our fleet and adjusting our capacity in response to travel demand. While much of our team is focused on navigating the near-term challenges, we are also laser focused on how the business will look for customers and crew members, as we transition to recovery.

Our focus will be on safety from the ground up which includes healthy crew members, clean air services, more space, fewer touch points, and travel flexibility. Given the goodwill and trust that we’ve built in our brand over the last 20 years, our mission to inspire humanity is now more important than ever.

We believe we are well positioned to be the airline of choice for customers as they become more comfortable returning to flying. Thank you again to our crew members for continuing to serve our customers and maintaining a safe operation. Over to you, Steve.

Steve Priest — Chief Financial Officer

Thank you, Joanna. I would like to add my thanks to our crew members on the front line and support centers, who in this time of crisis, are working day and night to take care of each other and our customers.

I’ll start on Slide 9 with a brief overview of our financial results for the quarter. Revenue was $1.6 billion, down 15% year-over-year. Adjusted pre-tax margin was minus 9.5%, down 13 percentage points from the first quarter of last year. GAAP loss per diluted share was $0.97 and adjusted loss per diluted share was $0.42.

Our effective tax rate for the quarter was 24%. In just a few short months, the coronavirus has significantly disrupted our business. Thanks to our continued focus over the last few years on managing JetBlue to investment grade metrics, building a strong balance sheet, improving our cost structure, and strengthening our margins, we believe we are in the best position of any time in our 20-year history to effectively weather this crisis and emerge even stronger.

From a financial perspective, we are focusing our efforts over the coming months on three key areas: Preserving our liquidity; reducing operating expenses; and managing our capital expenditures. Moving on to Slide 10, and our actions to preserve liquidity. We started the year with good momentum and in 2019 with over $1.3 billion in cash, cash equivalents and short-term investments. Since the start of the crisis, our treasury team has done an incredible job raising additional liquidity.

In mid-March, we’ve quickly raised $1 billion under the term loan arrangements and in April, we drew down our revolver of $550 million. We also raised $150 million of cash to the sale of future points. Finally, two weeks ago, we received the cash injection for $936 million from the CARES Act to support our crew members.

At the close of April, our cash, cash equivalents and short-term investments reached $3.1 billion or 38% of our 2019 revenue. As we move into the summer, we plan to take further actions to bolster liquidity. We recently applied for the federal CARES Act loans for $1.1 billion.

However, we are not prioritizing additional liquidity rises in the public markets including issuing secured debts, and entering to sale leaseback transactions to take advantage of our unencumbered asset base. Excluding the CARES Act loan, our goal is to raise upto $750 million over the next couple of months, which would take our total liquidity to approximately $3.25 billion by the end of the second quarter.

In addition to successfully raising liquidity in a short period, we have acted with urgency to minimize our cash burn, reduce our expenses and rework our plan to capital expenditures. We lowered our cash burn from an average of $18 million per day during the second half of March to an average of $12 million in April. As we enter May, we expect our cash burn to be just under $10 million per day. We expect to see further improvements in the third quarter aiming our cash burn to range between $7 million and $9 million per day.

To be clear, all of our cash burn assumptions do not include the CARES Act proceeds. We are leaving no stone unturned to protect the financial security of JetBlue. Turning to Slide 11. We spent the last three years executing our structural cost program on building a cost-conscious culture across the whole of JetBlue. We are all in this together and since the start of the pandemic, all of our 23,000 crew members have been relentlessly focused on finding ways to manage our costs and preserve our liquidity.

Starting in March, we quickly reduced our operating expenses to lower our daily cash burn and extend our liquidity. We took action eliminating all non-essential discretionary spend and minimizing marketing, trading, catering and on board services. In addition, we took the opportunity to in-source services across 29 airports in order to reduce our cash costs. As Joanna mentioned, we are able to cancel some of our flying for the month to avoid some variable costs. However, much of our cost base is relatively fixed, partly due to the timing of bid periods.

As we moved into April, and especially now into May, we are improving our daily cash burn as we further reduce our variable and fixed cost structure. We continue pulling down capacity aggressively to ensure we achieve variable cost savings, and we are taking steps to hammer down our fixed cost across the organization. This includes consolidating airport operations, parking aircraft, reducing landing fees and optimizing maintenance expenses. Looking ahead, anticipate shifting our focus to more permanent structural cost program savings.

Thanks to these assets, we successfully moved around $150 million from our cost base during the first quarter. We expect operating costs including fuel to decline approximately 50% year-over-year in May. I’d like to extend a massive thank you to our amazing crew members who have volunteered to participate in time-off programs and to all of us in the JetBlue family for making a personal sacrifice.

I’d also like to thank our business partners for their flexibility and for working with us to extend payment terms and renegotiate contracts. Moving to Slide 12. During the past couple of months, we negotiated a deal with Airbus to rationalize our order book. We appreciate that partnership in supporting a new delivery schedule that helps our efforts to protect JetBlue. As a result, we expect to take fewer aircrafts than our original plan and our capex for 2020 to 2022 is now lower by $1.3 billion.

In addition, we suspended our plans to take the four leased aircraft we announced in January deferring associated engine capex required to add those aircrafts to our fleet. We also halted our A320 restyling program having completed over half of our fleet. We appreciate the related impact on customer experience, but we do not anticipate resuming our efforts until demand improves.

Lastly, we have reduced non-aircraft capex by suspending all non-essential projects across the organization. Moving to Slide 13. At the end of March, our debt to cap ratio was 44%. We anticipate principal and interest payments through the end of 2020 of approximately $100 million per quarter. Over the past few years, we invested the majority of our cash from operations back into JetBlue.

It is too early to know what the right level of leverage and liquidity will be during recovery, but our conservative approach in managing our balance sheet will not change. We remain confident that we will navigate this crisis as we have in the past and emerge even better positioned for success in the years to come. As a trusted travel brand, we believe that our efforts to inspire confidence will help support recovery.

On behalf of the JetBlue leadership team, again, I would like to thank our incredible crew members as well as our business partners and our communities for all of their support as we navigate these unprecedented times. We also want to thank the many government agencies out there on the front line supporting essential travel needs. Our hearts are with those including, friends and neighbors who have been impacted by COVID-19.

We will now take your questions.

David Fintzen — Vice President, Investor Relation

Thanks, everyone. Erica, we’re now ready for the question-and-answer session with the analysts. Please go ahead with the instructions.

Questions and Answers:

 

Operator

Thank you. [Operator Instructions]. Your first question comes from Duane Pfennigwerth from Evercore ISI.

Duane Pfennigwerth — Evercore ISI — Analyst

Hey, thanks, good morning.

Robin Hayes — Chief Executive Officer

Good morning, Duane.

Steve Priest — Chief Financial Officer

Good morning, Duane.

Duane Pfennigwerth — Evercore ISI — Analyst

Just on the capex. So you’ve taken that down nicely, and I just want to check that implies about $500 million for the remainder of the year. And are you done, should we consider this sort of your final work on 2020 or are you continuing to work that down?

Robin Hayes — Chief Executive Officer

Good morning, Duane. Just before we go any further, I just wanted to have a shout out to our partner Airbus. I think [Phonetic], such a challenging time where they’re going through their own sets of response to the crisis. They’ve been true partners as we navigate through this event.

You’re not far off in terms of your math, Duane, you’re pretty much in the ballpark. And with regards to like are we done, our work is never done. We are ruthlessly focused taking down the cash burn as we navigate through 2020. I’m incredibly proud of the work of the team. Taking us down from, as I said $18 million at the back end of March, today down to sort of $10 million in May. And hence, whether it’s on the capex side of the business or the opex side of the business, you can expect us to continue to act with vigor and expediency to get our cost structure down and continue to reduce our cash burn.

Duane Pfennigwerth — Evercore ISI — Analyst

Thanks. And then just for my follow-up maybe for Robin or whoever wants to take a shot at it, but just given the environment, all the work you’re doing, how do we think about plans for Europe and timing for Europe given the state of affairs here? Thank you.

Robin Hayes — Chief Executive Officer

Yeah. No. Thanks, Duane. I’ll take that. And look firstly, you know, the vast majority of our focus, and I’m sure we’ll get a question on this later in the call is, you got to play a lot of defense like this when you go through something of this magnitude. And we’ve got ’08, ’09, we had 2001, we had nothing like this. And so, as we emerge from this, as I talked about earlier in terms of our three objectives, the third one was to emerge knowing that our debt is going to be higher. We are going to do — we’re doing everything we can to mitigate that, but the priority for us over the next two years to three years has to be to lever and repair our balance sheet. So most of what you have to do is to play defense to get you there.

Having said that, for an airline like JetBlue, I think there are also opportunities to play a bit of offense. And I think that our decision to which we previously announced to fly to Europe, to start flights to London, I think that certainly, we wouldn’t be starting that today. Certainly, I think you should expect a timing impact in terms of — we’re probably going a little bit late than we intended. But, the market will recover at some point, and I think that the need for us to enter that market and bring more competition is still as relevant in the future as it was in the past.

So expect a timing impact, and I think you had a chance to see the news outside from the UK this morning, from the CMA, which is the Competition Authority, not too much detail, but the headline is entering into a sort of a consultation with BA, AA, about sort of regulatory relief for slots at Heathrow and Gatwick including markets to allow new entrants into markets like Boston, Heathrow.

So we’re encouraged by that. We’ve been pushing the point with regulators for the last two years. But the Transatlantic was not that competitive that we could bring price discipline. So I don’t want to be turned deaf to what’s going on right now. We know most of what we got to do is play defense. We know we’re going to emerge as a smaller airline, but as you asked me about London, we still see that opportunity, albeit probably shifted back a little bit in terms of time.

Duane Pfennigwerth — Evercore ISI — Analyst

Thanks. And if I could sneak one more in, and maybe for Robin as well. We’re in uncharted territory and obviously it takes a little bit of imagination to think about what the recovery might look like there is really no correlation to past periods, it’s all broken. But as you think about the different segments within the US that you serve, obviously leisure, visiting friends and relatives, Transcon, Caribbean, how do you think, what do you think will recover first? And is there anything in your bookings that’s giving us some hints to that? And thanks for taking the questions.

Steve Priest — Chief Financial Officer

So I’m going to start and then I’m going to flip it over to Joanna to talk about sort of view by segments. I would say that anyone who can — anyone who says they know how this is going to play out is lying. No one knows. All we can do is prepare for many different scenarios, and be ready to adjust and adapt quickly as they start to play out.

I do believe that our network, which is predominantly domestic, our low-cost structure, our trusted brand, lead us to exit this crisis in a relatively favorable position. But, even that said, it’s going to be some time before demand recovers to where we were in 2019. And so, we are spending a lot of time on that. We’ve got a number of teams set up to look at that and work through those scenarios, Duane. In terms of the specific geographies, I think I’m going to pass it over to Joanna, because I know that’s something the team has been studying very, very closely.

Joanna Geraghty — President and Chief Operating Officer

Good morning, Duane. So, as I noted during the prepared remarks, we believe demand bottomed down in mid-April. We are starting to see some very small improvements in bookings, but obviously we’re very conservative with what we’re seeing, and it’s too early to tell if there is a permanent change in the trend. As we look at different customer segments, we do believe leisure will return earlier than business. A reminder, there’s two types of leisure, there is the pure leisure customer, those that are going on vacation, and then there is the leisure customer that visits their friends and relatives.

And we know based upon prior experience from Zika, and in situations where there has been civil unrest in countries that shockingly people do still go back to visit their families. So we do think that, that VFR segment has the best chance of recovering first, followed by pure leisure.

As we think about the network, international versus domestic, we obviously believe domestic will recover sooner than leisure. I mean, as Robin pointed out, given that our network is predominantly leisure 80%-20% and largely domestic, and the fact that we have a meaningful cost advantage to the legacy carriers, we feel that JetBlue is the best — is best set up for recovery when recovery happens.

Operator

Your next question comes from Catherine O’Brien with Goldman Sachs.

Catherine O’Brien — Goldman Sachs — Analyst

Good morning, everyone. Thanks for the time. Maybe just taking off maybe following on the back of your last comments, Joanna. So on the comment that you think in mid-April was the bottom in demand sounds like that’s maybe picked as based on, on a small pick-up in bookings here. We just had Spirit commenting that load factors saw a material improvement in May.

I guess, first, are you seeing that or is that mid-April bottom more comment on the closing and refunds? Any color there would be helpful. Thanks.

Joanna Geraghty — President and Chief Operating Officer

Sure. Good morning. Catherine. So a couple of maybe points, and we are seeing load factor pick up very, very slightly, in largely Florida and Northeast. And we also are seeing some modest improvements in no show rates. So if those are — as you think about very early leading indicators, but again I think it’s important to just go back to there is a lot of uncertainty around the timing and the shape of recovery.

Our focus is to be flexible, capacity, our capacity decisions will be driven by the pace of demand recovery and cash economics and that’s our focus right now.

Catherine O’Brien — Goldman Sachs — Analyst

Okay, understood. And then, maybe one for Steve or Robin. So can you talk us through your — the assumptions you’re making to get from under $10 million cash burn today to that $79 million throughout the third quarter? Just trying to think about what portion of that is an improvement — is an assumption on an improving demand and what is the further cost cuts? Thanks.

Steve Priest — Chief Financial Officer

Hi, Cathy, it’s Steve here. Good morning. It’s nice to speak to you.

There’s a few items in — so in terms of sort of sequential improvement, again, I’m very, very delighted to sort of see the progression as we navigate through the year. The one thing I do want to emphasize as a starting point, in May, the $10 million a day that we talk about basically includes everything, opex, capex and the cost of financing. But to Joanna’s point, we’ve been incredibly conservative on our passenger cash revenue assumption. And that is actually slightly negative due to the current demand environment.

So I just want to put that out there, because I know there’s a lot of confusion when you guys are trying to sort of align up airline by airline and work out the sort of cash burn. I think that’s a very, very important point when we think about starting point in May. And then by the way, just for absolute clarity that excludes any sort of CARES Act grant relief. And so as we navigate our way through the year, and we’ve seen a significant improvement from March through to May, the first thing I’d say is that continued ruthless focus on our cost reduction programs and obviously take time in some cases to flow through and the teams are working extremely well at doing that.

The second key thing is really around the capital flows for our non-aircraft capex spend, because as you can imagine you stop a bunch of projects at the start of the second quarter, we obviously had a number of projects that were moving forward in March, and then you’re sort of catching up with the working capital. So as you navigate your way through the year, you have the impact associated with that.

The third item, as I commented on our prepared remarks, we couldn’t be happier and more grateful from our crew members for stepping up and the continuation of the voluntary programs. And by this stage as we got later in the year we will have the completion of a number of opt-out programs, which means our underlying labor cost will continue to go down.

And then finally, as I mentioned, from a slightly negative passenger cash basis in May, we are continuing to make some very conservative assumptions about modest improvements as we go forward from a cash standpoint on revenue. So I think the story has done a fantastic job as we come into this crisis on the cost standpoint to reduce the burn, even in a sort of negative revenue cash revenue environment and you’ll sort of see those four factors play out as we navigate our way into the — the latter quarters of the year.

Thank you, Cathy.

Operator

Your next question comes from Hunter Keay with Wolfe Research.

Steve Priest — Chief Financial Officer

Hi, can you guys hear me? Hi, Hunter. Good morning, how are you doing? Yeah, we can hear you loud and clear.

Hunter Keay — Wolfe Research — Analyst

Good morning. Thanks, I was having a little bit of phone problems before, so I apologize if I repeat the question. By the way, Robin, I just want to say, I thought that was a really nice thing that you said on the call this morning. That was very kind and thoughtful about your crew members.

Robin Hayes — Chief Executive Officer

You’re going to make me come out in [Indecipherable]

Hunter Keay — Wolfe Research — Analyst

No, I’m just saying, it was a nice thing to say, and it was nice. But anyway to my question, the $750 million of cash that you talked about raising, Steve is that all debt or how — or a more simple question, is that all debt?

Steve Priest — Chief Financial Officer

Good morning, Hunter. Yes, it is. I’m obviously getting quite a few external questions and thoughts in terms of saying, what the competition is doing in the markets. We enter this crisis with a very strong balance sheet in relation to others. And we have a nice level of unencumbered assets on the balance sheet. Our focus at this point is continuing to tap the commercial debt market. We are active in the Southern leaseback market, when it comes to equity or converts, that’s much lower down the list, and so yeah, our focus at the moment is really around raising debt.

Hunter Keay — Wolfe Research — Analyst

Okay, thanks. And then on the 170 planes, can you tell me what the mix of those are? And how many of those are not coming back?

Steve Priest — Chief Financial Officer

In terms of the 170 obviously, as we’ve gone through the network, we’ve pared the selection, I mean, we’ve got basically got two fleets, right, the Airbus fleet, the A320 family and the E190s. We’ve looked at the network. We’ve looked at the city pairs that we’ve gone forward with. As you know, we’ve managed to consolidate services in various cities, the likes of New York, Boston, LA, as Joanna said in her various comments. In terms of when demand starts to come back, and we start thinking about the aircraft mix, we’re looking at various scenarios of that and what that looks like and what we’re bringing back in the associated timeframes.

And so we’re going through that planning at the moment. The big focus for us is having the right aircraft to fly the network, if it start to come back. And to sort of minimize cash burn as we go forward. And so we’re working through that at the moment and you’ll hear more from us in due course.

Hunter Keay — Wolfe Research — Analyst

All right, Steve. Thank you.

Operator

Your next question comes from Brandon Oglenski with Barclays.

Brandon Oglenski — Barclays — Analyst

Hey, good morning everyone, and thanks for taking my question. So Steve, I guess if I can follow-up there on that. You do have a pretty sizable term loan coming due in next March. And I understand like that was very easy to draw down quickly and definitely the prudent thing to do. But I guess how do you think about seeing the maturity profile on the balance sheet with some of the financing you’re talking about?

Steve Priest — Chief Financial Officer

Yeah, thank you, Brandon. And again, I made the point that we are sort of continuing to keep an eye on that as we navigate our way through 2020. The biggest focus we have at the moment is continuing to raise liquidity. Obviously, the term loan is secured by a good set of assets behind that facility as we go forward. But again, we came into this crisis with our conservative approach to debt to the cap.

So our main key focus as you would expect at the moment is continuing to drive liquidity and that’s why it’s worth about $750 million and making sure that we have over $3 billion as we complete the second quarter. The treasury team are virtually focused on making that a reality at the moment.

As we get beyond that, we’ll start thinking as we come to the latter parts of the year about future financing and how we play that forward. But when I think about the unencumbered asset pool of JetBlue, and how big that is, we’ve also looked at some other potential assets as we’ve continued to work with the treasury team into the guidance of Secretary Mnuchin who we would really like to thank for that support with the CARES Act along with the partners of PJT.

I’m comfortable with how we’re navigating that. So we will turn to that as we get to the latter part of the year after we secure further liquidity facilities in the near-term.

Brandon Oglenski — Barclays — Analyst

Okay, I appreciate that response, Steve. And I guess on a broader issue, I forget if it was Robin, yourself or even Joanna that mentioned JetBlue will be a smart carrier on the back end of this. So it’s helpful that you guys disclosed the $1.3 billion reductions in aircraft capex over the next couple of years. But I guess, can you discuss even the need to take new deliveries even in 2021 if the outlook is that this is going to be a smaller industry, at least for some period of time?

Steve Priest — Chief Financial Officer

Yeah, I think it’s a good question, Brandon, and I’ll take it. I mean, I just want to say like our immediate focus has been on 2020. You would expect nothing less. And our negotiations primarily was based on reducing cash burn during that period. You’re right, I mean every airline is going to come out of this crisis, small, and it’s going to take some time to ramp. I think we’ve made really, really good progress in reducing our aircraft capex by $1.1 billion and the other capex going forward, and we are moving a third of our order book over that period, and we’ve made a great start, and we’ve got to continue to manage this crisis and the recovery on a step by step basis.

And as you would expect, as you’ve seen from JetBlue, in the past, we’re conservative in nature. You’ll see us go step by step as we navigate our way through this. But 2020 has been the key focus for now, and we’ll continue to look at future years as we navigate this crisis and look into the timing and the speed of the recovery.

Operator

Your next question comes from Jamie Baker with JPMorgan.

Jamie Baker — JPMorgan — Analyst

Hey, good morning everybody. Steve, I’m assuming you’ve sought aircraft lease deferrals, or maybe negotiations are still taking place. Can you provide any update there?

Steve Priest — Chief Financial Officer

Yes, I can. Good morning, Jamie. And just as a reminder, in terms of our overall fleet, we’ve generally been in the position where we’ve owned our own fleet, we have limited number of leases at JetBlue, I think around like 40 most of that’s on our E190 fleet. So, we are and have been in extensive discussions with our lessors around that. But as you can imagine, I wouldn’t be disclosing the details on a public call. But yeah, I can assure you as you would expect, that no stone is left un-turned, and that includes our lessor partners, that support us as JetBlue.

Jamie Baker — JPMorgan — Analyst

Okay. That’s fair. Can you provide an update on that unencumbered asset pool, both the size when it was most recently appraised, and I guess peeling back the earning a bit, the constitution of the pool and following on the Hunter’s question does that $750 million raise over the next few months? Any specific loan to value assumptions as part of those planned transactions as it relates to the pool? Thanks.

Steve Priest — Chief Financial Officer

Great question, Jamie. So just to give you some color, we have around 70 unencumbered aircraft in the fleet, but it’s not just around aircraft. Obviously, we’ve got other unencumbered assets with regards to engine spares and other collateral that we sort of look at. We generally take quite a conservative approach. And as you would expect us to do, we have been very active in terms of working with appraisers to understand the market values of our assets, so that we can be on the front foot when it comes to raising further debt.

And so, you should think of our collateral pool, so directionally heading towards $2 billion. But that excludes things like the loyalty program at any of the subsidiaries where again we have had, started to have some good extensive discussions with the treasury and our advisors around sort of the backstop of the government line.

So when you think about the sort of $750 million debt raise, for May we have a nice pool of assets and liquidity with the quality assets sitting behind that, where we can get the requisite loan to value to get the funds raised and again that will be a combination. You should assume a sale-leaseback and sort of aircraft debt market.

So that’s really how we’re thinking about this at the moment. And then in parallel, as I say, we’re working with the treasury to have the government loan on the shelf. So in the event, we need it, we’ve got it there as a backstop. So that’s really how we’re thinking about these things.

Operator

Your next question comes from Joseph DeNardi with Stifel.

Joseph DeNardi — Stifel Nicolaus — Analyst

Yeah, thanks, good morning. Robin, I appreciate that there are a number of different scenarios in terms of what a demand recovery looks like, but you’re kind of raising liquidity based on one of those playing out, and then I would assume you would look to raise more if things perform worse than that. So can you just help us understand with maybe what you are expecting over the next couple of quarters from a revenue standpoint, just so we can kind of have a baseline to measure against? Thank you.

Robin Hayes — Chief Executive Officer

Sure, Joe. Actually, I’m going to hand that over to Joanna to talk about the next two quarters. I just want to make a general point here about demand. I mean, raising liquidity is important in a time like this because they talk to your sustainability as you come through it. I want to tell you and I go back to sort of the three objectives I laid out earlier. Reducing down our cash burn is important, because you can kind of limp out of this thing with a lot of debt and then spend a lot of time paying that down.

And so we don’t want to just raise liquidity to burn it. So we’re raising liquidity, but we’ve got to aggressively to continue to reduce cash burn. And I want to give a shout out to the team because they have been incredible, how aggressively we have moved. I mean, Steve gave some examples in his comments. I look at how aggressive we’ve been with DoT to get permission to reduce flying. When we got denied, we went back and we applied and then got some success.

We put another application in a couple of days ago for an additional set of market. So for me, because even if $1 million a day, I know it doesn’t sound much, but over a three month period, even, my math tells me that’s another $90 million or so that you can sort of, I’m sure you don’t have to then pay down when we come out of this. So it’s liquidity, it’s cash burn, it’s balance sheet and then it’s a path to repairing that balance sheet as quickly as you can.

So that’s just how we’re approaching it, and then I’m going to maybe hand over to Joanna to talk about demand in the next two to a couple of quarters, knowing that there are so many uncertainties here that it is actually very hard to call.

Joanna Geraghty — President and Chief Operating Officer

Yeah. Thanks, Robin. So just to echo Robin’s comment, there was so much uncertainty around the timing and the shape of recovery. So our focus has been on remaining flexible. We do expect a phased recovery and adapting to that changing environment. From a planning perspective, we’re assuming an L-shaped curve, which has a recovery beginning in earnest out into Q3 and Q4.

I think at the end of the day, recovery is going to be dependent on customers being confident, returning to flying and crew members feeling safe to work. We do think that our model has inherent advantages that will serve us well in the recovery process obviously, as we’ve mentioned, predominantly leisure, predominantly domestic. We definitely have a differentiated product. Our lower cost, we think will be critical during this timeframe, narrow-body airplanes, and then obviously our brand.

We are trying to stay incredibly close monitoring all leading indicators, as well as measuring customer sentiment. In terms of what customers are going to need to get comfortable flying again, and when we see those green shoots we want to be in a position to take care of them. We have in our view led the industry throughout this pandemic from our flexible labor program to the extension of the travel ban. We’ve led the industry in capacity cuts, I think we’ve been probably the third highest in terms of capacity cuts.

We’ve led the industry in social distancing. We capitalized back in March. So we’re well-positioned, further capped, we provided wipes to customers and as you think about that recovery, all of those things are going to be so critical to getting customers back on our planes, when the time is right. But again, so much uncertainty, the planning has Q3, Q4 level of demand coming back, but again up in the air for every carrier from right now.

Joseph DeNardi — Stifel Nicolaus — Analyst

Certainly, I appreciate that. Steve, you guys are, I think the first airline to use an advanced sale of miles as a source of liquidity. Can you talk about what restrictions that may include in terms of using that asset as collateral, if any? And then other airlines have kind of talked about what they think the value of the program is, can you talk about that as well? Thank you.

Steve Priest — Chief Financial Officer

Yeah, Joe. So, great to speak to you, good morning. With regard to the miles purchase, we decided to sort of do a transaction with Barclays. It was just a relatively small liquidity rise. The terms are pretty attractive. We’ve been very, very fortunate to have such a fantastic relationship with Barclays over the last few years. They really stepped up. And so, we took the opportunity to add a little bit of liquidity in there. It doesn’t come with any restrictions that we need to be concerned about.

With regards to the overall program, obviously, as I mentioned in my earlier comments, we are in advanced talks with the Treasury Advisors, and one of the things we are discussing is the loyalty program. So we have been getting valuation done. It’s not complete yet, but we’re working through that process because it is a less mature programs than some of the legacy players. But it does give a significant value for JetBlue. So we’re looking forward to having that valuation complete, and it should be a good source of an asset for us as we sort of go forward.

Joseph DeNardi — Stifel Nicolaus — Analyst

Good luck.

Robin Hayes — Chief Executive Officer

And Joe, good luck in the big debate with Hunter. If you need an airline CEO to read out for you, I am available.

Operator

Your next question comes from the line of Savi Syth with Raymond James.

Savanthi Syth — Raymond James & Associates — Analyst

Hey, good morning. Just, firstly a quick clarification, Steve, you had mentioned four items that are kind of bridging your cash burn from what you’re seeing today at May and what you think you can get to the third quarter. One was just maybe the passenger revenue drag going away, non-aircraft capex coming down, and then kind of the early opt-out programs, kind of taking effect. I missed what the fourth factor was. I was wondering if you could remind me again.

Robin Hayes — Chief Executive Officer

Good morning, Savi. It’s just a sort of general continued focus on cost reduction. You know, better than most, the amounts of detail we went through over the last couple of years around the structural cost program, taking many hundreds of millions of dollars out of JetBlue’s cost structure. That has puts us in good shape coming into this crisis. But there is always more to do. And again, the teams have really stepped up to go that level deeper. And so, you continue to see the flow of some of those initiatives going from 50%, for example to 100% of the initiative as you go through the next few months. So that’s the fourth item I was talking about.

Savanthi Syth — Raymond James & Associates — Analyst

Great. And thanks for that. That’s right. And another question I had which was maintenance contracts for some of the engines, where some of the big items you were working on for the last couple of years and that was done in a time where capacity was really, supply was really tight, for the MROs. And so, I’m wondering is this an opportunity, I know these are long-term partners, but an opportunity to go to your kind of MRO partners and get perhaps kind of better longer-term deals that have probably kind of the better — sets you up better on longer-term.

Steve Priest — Chief Financial Officer

Yeah, I mean and I wouldn’t assume, Savi that we haven’t been talking to them, because again there is a number of our partners. This is such an unprecedented crisis, I think about partners like Pratt & Whitney as we’ve gone through this crisis, they’ve been there shoulder to shoulder with us, as we worked through this liquidity crisis. And so, yeah, I mean we spent many, many, many months, in fact, over a year and a half, going through these engine maintenance contracts, but going through that sort of experience with these business partners has been terrific.

And now in our hour of need, they’ve stepped up again. So those conversations continue, and we’re pleased with the progress that we’re making.

Savanthi Syth — Raymond James & Associates — Analyst

Excellent. And then if I can just clarify the four aircraft that you are planning to lease earlier this year, is that just suspended or is that just deferred?

Robin Hayes — Chief Executive Officer

It’s suspended.

Savanthi Syth — Raymond James & Associates — Analyst

Okay, thank you.

Robin Hayes — Chief Executive Officer

Thank you, Savi. Have a good day.

Operator

Your next question comes from Helane Becker with Cowen.

Helane Becker — Cowen and Company — Analyst

Thanks very much, operator. I appreciate the time and thanks for squeezing me in at the end. Two questions, one is, did you talk about the number of people who took leads or are you having everybody continue to work and just do fewer hours?

Robin Hayes — Chief Executive Officer

Hi, Helane, I’ll take that. Our crew members have really stepped up. We’ve had — since we sort of put out a series of voluntary programs, about over 11,000 about 60% of our crew members have taken some form of voluntary time off. That was a real sense of, we are all in this together, we’re going to get through this together, and I couldn’t be so — I couldn’t be more proud of just how many have stepped up to take some voluntary time off.

Helane Becker — Cowen and Company — Analyst

Okay, all right, that’s helpful. Thank you. And then my other question is, Robin, we spent a lot of time earlier this year talking about sustainability and what you guys were doing in that front. And I know that, that probably takes a backseat to what’s going on right now with the virus and everything like that. But how are you thinking about that? Because I know that was going to be an important issue for you this year and going forward. So, I don’t know — maybe you can talk a little about that.

Robin Hayes — Chief Executive Officer

It is not taking a backseat at all. I mean, investors who are really committed to this space, they’re looking at how companies handle events like this, what decisions do you take. So it is critical. And when we think about the future size and shape of JetBlue, we haven’t spent that much time on this call talking about that. Under the leadership of Tracy Lawlor, who leads our Strategy team, we created a number of focus areas, and one of them is ESG. Because as we come out of this, there are a number of things, I think we’ll be doing differently as an airline, as an industry. And I think ESG is absolutely core to that.

And so it’s not going to go away. We’re in the middle of something now that is, we’ve never been through. We know we have to be aggressive coming out on the other side, we didn’t work hard in the last ten years to get the second-best balance sheet in the US to waste it all, kind of as we go through this crisis. So we know we have a lot of difficult decisions ahead of us.

We are managing that as we sort of work through what the future size and shape of JetBlue is, but ESG is actually one of the main pillars of that work and they absolutely should be.

Helane Becker — Cowen and Company — Analyst

Great. That’s really helpful. Thank you.

Robin Hayes — Chief Executive Officer

Thanks, Helane.

Operator

Your next question comes from Mike Linenberg with Deutsche Bank.

Michael Linenberg — Deutsche Bank — Analyst

Yeah. Good morning, everyone. I guess two questions here. One, just Joanna and maybe Robin or Steve can chime in as it relates to, you had mentioned earlier about transatlantic getting pushed back, obviously, given the backdrop. How do you think about the A220, I mean the first airplanes are coming in later this year, and we think that probably not the most optimal time to induct a new airplane type combined with the fact that there’s probably going to be some — not — call it non-value add expenses associated with pilot training and the like. How do you think about that? And as we move through the year does that potentially get pushed back as well? Your thoughts on that.

Steve Priest — Chief Financial Officer

Hi, Mike. I’ll pick that up. Good morning to you.

Michael Linenberg — Deutsche Bank — Analyst

Hi, Steve.

Steve Priest — Chief Financial Officer

As we said, I mean, we have been evaluating a number of demand scenarios, as we go through this and before the crisis, we are incredibly excited about replacing the E190s and the A220 is obviously a pivotal part to that. The A220 business case, because of its sort of newer technologies and the economics of the aircraft, incredibly strong economics, and a real game-changer for JetBlue. And so, as Robin said, we don’t want to be turned deaf, we’re going through this crisis. When we come out of the other side of this, we continue to be excited about the A220s and the benefits that can bring to JetBlue. And it also gives us thoughts about, what can we retire and how we navigate that as we go forward, thinking around the E190 fleet.

And so, I don’t think you should think that anything changes. The economics of this aircraft is spectacular, and I’m pleased to have them in the order book. As we sort of look and we’ve been talking to Airbus as we go forward, that remains intact, and we’re looking forward to bringing the 220s into the fleet.

Robin Hayes — Chief Executive Officer

Yeah. And if I can just add one thing. We’re going to stay on, by the way, I know some of you might have to drop off, we’ll be having a couple of questions left, which we’ll cover. But the other thing I’ll add, Mike, is when we think about like demand and what’s going to come back, we — we’re running scenarios for different segments, different geographies. And I think we all look at business travel and where we think that we know it’s going to take sometime to come back and where we have markets that have — like a Boston DCA, where we have multiple frequencies a day. Those markets may be actually better served with a less frequency for a period of time, and an airplane like A220 could be really helpful for that in actually helping us serve it more profitably.

So I can’t think to Steve’s point, we made some — I’m very happy, I want to call out Airbus, while they’ve been a really good partner, this was not easy for them. The priority was 2020, and we can always look at it and say, wish we could have got more. I think, it’s really, really good for us that we’ve got clarity on where we are. We can go forward, we can plan for a lower capex headline and we can focus on getting our cash burn to other initiatives around non-aircraft capex and operating expense for the rest of the year.

Michael Linenberg — Deutsche Bank — Analyst

Okay, very helpful. And then just a quick one to Steve, I’m not even sure you even mentioned this in the comments, but just in the release, it talks about adding hedges through the June-September and December quarter, obviously taking — being opportunistic and taking advantage of the low fuel price. To what extent are those hedges, what’s the coverage, I guess maybe that’s actually very difficult to ascertain given that you don’t know what your capacity plans are going to be like over the next few months, but just if you could give us some more color on that hedge book. Thank you.

Steve Priest — Chief Financial Officer

Great question. And just to clarify, Mike, these are not incremental hedges. These were in place before we sort of went forward. So post crisis, obviously we’ve been completely focused on cash burn and wouldn’t be sort of entertaining that. Obviously, as we pulled down capacity significantly, the proportion of the field that’s actually hedged has gone up pretty significantly when you are flying about 10% of the schedule. So you should think about this, a lot of stuff in the 50% range compared to where it was before.

But in terms of overall insurance and everything else that we got on those things. It’s not particularly significant, but nothing new since the crisis and again the hedge side of things has moved up as a factor of the reduced flying and the reduced ASMs that we’ve got in the network.

Operator

Your next question comes from Andrew Didora with Bank of America.

Andrew Didora — Bank of America – Merrill Lynch — Analyst

Hey, good morning everyone. Most of my questions have been asked and answered, but just had one for Steve on the Barclays point sale. You guys seem to act pretty quick on this. Just curious, was the ability to pull forward some of these mileage sales a part of your agreement with Barclays at an already predetermined rate or was this all negotiated as the crisis unfolded? Thanks.

Robin Hayes — Chief Executive Officer

Again, I just want to reiterate, we have a number of very strategic partners at JetBlue, and Barclays are clearly there with us. They were very quick to reach out to us, as they saw going into this crisis and put attractive terms on the table. And when we looked at it and thought the level of it, it was just a good opportunity for us to get a small amount of incremental liquidity at attractive terms. So I wouldn’t read any more into it than what you see there.

Andrew Didora — Bank of America – Merrill Lynch — Analyst

Okay. And so — did that money come in March or April?

Robin Hayes — Chief Executive Officer

I think it was in March.

Andrew Didora — Bank of America – Merrill Lynch — Analyst

Okay. Thank you.

Operator

Your next question comes from Chris Stathoulopoulos with SIG.

Christopher Stathoulopoulos — Susquehanna International Group LLP — Analyst

Good morning and thanks for getting me on here. So two questions. Earlier in your prepared remarks, I believe, perhaps in response to someone you spoke about looking at leading indicators with respect to demand in the second half. So, curious, are you talking about bookings, infection rates, hospitalization rates. And then the second question, the crisis here obviously is not localized to a certain part of the economy or a specific industry. So as we think about the value chain for aviation here as a whole, I’m guessing that there are opportunities certainly upstream around perhaps airport cost, catering, and things like that where the costs [Phonetic] that in the past, that have been fixed and largely perhaps flexible, I’m guessing at this point, there is opportunities going forward to revisit these.

So outside of all the work that you’ve done on the maintenance side and some of the areas as part of your structural cost program, could you talk about perhaps what opportunities there might be up in the midstream — up in the midstream markets with respect to costs going forward? Thank you.

Robin Hayes — Chief Executive Officer

I’ll hand over the first part to Joanna on the indicators. I would say that we’re going to keep our comments quite high level, because we think that some of the insight packages and some of the ways we’re looking at this, we see as a source of a sort of something we want to kind of keep within JetBlue. But I’ll ask Joanna to maybe at a high level, sort of share some of the things that we’re looking at. Thank you.

Joanna Geraghty — President and Chief Operating Officer

Great. Hi, Chris. Thanks. So we have a number of indicators we’re looking at. Obviously all the statistics through the WHO, COVID case counts, all the factors that are playing into whether the curve is flattening or not, obviously monitoring all of the shelter in place restrictions and all the travel advisories across international locations, taking a look, obviously at unemployment data and other macroeconomic factors.

We’re monitoring Google trends, looks and trying to make sure that we understand what customers are shopping for, what they’re looking at, how we stack up next to other carriers, credit card spend, consumer sentiment indicators. We obviously have a number of tools that we use that measure traffic to our websites, our bookings data, GDS data. So there was a whole variety of factors. We also began this week asking a number of questions around customer sentiment as well.

So all of these sources are what we’re relying on to arrive at a recovery stage indicator for each category.

Steve Priest — Chief Financial Officer

Hi, Chris. Steve here. I just want to make sure, I’m absolutely clear. Is the essence of your question, our ability to in-source activities from a cost standpoint?

Christopher Stathoulopoulos — Susquehanna International Group LLP — Analyst

Whether there is opportunities to revisit some costs up in midstream that in the past have for whatever reason you might have just accepted them for what they were if you will, but given the pressure across pretty much the entire value chain here, I’m guessing folks are looking for relief everywhere. And so as we think about costs and perhaps also the footprint of the network as we come out of this, what opportunities there might be outside of the work you’ve done on maintenance within the cost reduction program, which my understanding was sort of like the biggest piece there. Thanks.

Steve Priest — Chief Financial Officer

Great question, Chris, thank you for clarifying. I think if I bubble it up to a strategic level, we are doing a piece of work around the future size and shape of JetBlue, in terms of what we like coming out of this crisis. You also sort of think about, you know we’ve traditionally looked to what the split is between the world within ourselves and we’ve had business partners to do.

We’ve taken the opportunity to navigate through this crisis. As I said in my prepared remarks to bring some of that work in-house, at 29 airports where we’ve done certain things like that. You will, I believe continue to see some consolidation in the business partner space as we navigate this crisis. But again, the one thing I would say, we’ve spent the last three years, going through every single cost line and every single function across JetBlue, as part of the structural cost program.

So we know where the opportunities are. And as we sort of continue to go through size and shape work with our strategic business partners, we continue to do. There will be further opportunities for us to take our cost structure down and our ultimate cash outflows down. So, a great question, very strategic approach, and not something we are focused on as we come out of the other side of this crisis.

David Fintzen — Vice President, Investor Relation

Thanks, everyone. And that concludes our first quarter 2020 conference call. Thanks for joining us. Have a great day.

Operator

[Operator Closing Remarks]